• Ormat Technologies Reports Second Quarter 2022 Financial Results

    Source: Nasdaq GlobeNewswire / 03 Aug 2022 15:30:00   America/Chicago

    HIGHLIGHTS

    • TOTAL REVENUES FOR THE SECOND QUARTER INCREASED BY 15.1% YEAR OVER YEAR LED BY ELECTRICITY SEGMENT
    • OPERATING INCOME INCREASED 34.9% YEAR OVER YEAR
    • ADJUSTED EBITDA GREW 19.1% YEAR OVER YEAR
    • ORMAT REITERATES 2022 ANNUAL GUIDANCE

    RENO, Nev., Aug. 03, 2022 (GLOBE NEWSWIRE) -- Ormat Technologies, Inc. (NYSE: ORA), a leading geothermal, energy storage, solar PV and recovered energy power company, today announced financial results for the second quarter ended June 30, 2022.

    KEY FINANCIAL RESULTS

     Q2 2022Q2 2021Change (%)H1 2022H1 2021Change (%)
    GAAP Measures      
    Revenues ($ millions)      
    Electricity151.2 133.9 12.9%313.7 278.9 12.5%
    Product10.4 7.4 40.2%25.0 16.1 55.9%
    Energy Storage7.5 5.6 33.1%14.1 18.3 (23.4)%
    Total Revenues169.1 146.9 15.1%352.8 313.3 12.6%
           
    Gross margin (%)      
    Electricity36.8%37.4% 39.4%41.3% 
    Product0.2%20.1% 4.2%12.8% 
    Energy Storage25.3%6.4% 19.8%45.2% 
    Gross margin (%)34.1%35.4% 36.1%40.1% 
           
    Operating income ($ millions)38.6 28.6 34.9%83.7 78.5 6.6%
    Net income attributable to the Company’s stockholders11.3 13.0 (13.6)%29.7 28.3 5.0%
    Diluted EPS ($)0.20 0.23 (13.0)%0.53 0.50 6.0%
           
    Non-GAAP Measures      
    Adjusted Net income attributable to the Company’s stockholders12.2 13.0 (6.7)%32.0 37.1 (13.7)%
    Adjusted Diluted EPS ($)0.22 0.23 (6.4)%0.57 0.66 (14.0)%
    Adjusted EBITDA1 ($ millions)100.7 84.5 19.1%208.5 183.8 13.5%

    “Ormat’s second quarter financial performance demonstrated healthy top-line and Adjusted EBITDA growth, driven by strong performance from our Electricity segment as well as our Energy Storage Segment,” said Doron Blachar, Ormat’s Chief Executive Officer. “Our robust top-line and solid margin capture are driving significant expansion to both Adjusted EBITDA1 and Operating Income. Our bottom line was negatively impacted by a $2.9 million after-tax loss related to foreign currency hedging that reduced our earnings per share by approximately 5 cents. The strong performance of our Electricity and Energy Storage segments is expected to continue in the second half of the year, benefiting from the ramp up in the operation of new five different projects with a total capacity of 73MW added since the end of the first quarter.”

    “We are encouraged by our robust pipeline and our ability to benefit from the attractive energy rates and structure of the three portfolio PPAs we signed in Nevada and California for up to 285MW. These agreements demonstrate the increased demand for geothermal energy, while securing most of our PPA renewals and the capacity we plan to add in the next few years in the U.S. We remain confident with our long-term plans to increase our combined geothermal, energy storage and solar generating portfolio to approximately 1.5 GW by 2023 and to deliver an annual Adjusted EBITDA of $500 million on a run-rate basis towards the end of 2022,” Blachar added.

    _______________
    1     Reconciliation is set forth below in this release

    FINANCIAL AND RECENT BUSINESS HIGHLIGHTS

    • Net income attributable to the Company's stockholders and diluted EPS for the second quarter of 2022 decreased 13.6% and 13.0%, respectively, versus the prior year period. The decrease was mainly due to a $4.0 million pre-tax loss ($2.9 million after tax) from currency-related headwinds attributed to a stronger U.S. dollar, and $1.1 million pre-tax ($0.8 million after tax) of other expenses related to debt extinguishment costs.
    • Adjusted Net income attributable to the Company's stockholders and adjusted diluted EPS for the second quarter of 2022 decreased 6.7% and 6.4%, respectively, versus the prior year period.
    • Adjusted EBITDA for the second quarter of 2022 was $100.7 million, an increase of 19.1% compared to $84.5 million in 2021, supported by growth in the Electricity segment and lower G&A costs mainly as a result of the reduction in legal costs.
    • Electricity segment revenues increased 12.9% for the second quarter of 2022, compared to 2021, driven by focused execution against our strategic plan, supported by the addition of the Terra-Gen assets to our portfolio, the expansion of the Tungsten 2 power plant, and the realization of higher prices and generation at Puna, partially offset by the partial operation of the Heber 1 power plant and Dixie Valley’s accelerated maintenance work.
    • Product segment revenues increased 40.2% to $10.4 million, and cost of revenues increased 75%. In the second quarter, we recognized revenues for contracts that were signed in 2021 and negatively impacted by higher raw materials costs in 2022.
    • Product segment backlog grew this quarter by 20.1% compared to the first quarter of 2022. Backlog stands at $54.9 million as of August 03, 2022, and we were able to sign contracts awarded earlier in the quarter totaling approximately $20 million.
    • Energy storage segment revenues increased 33.1% to $7.5 million, primarily due to a $2.4 million increase in revenues attributed to the PJM assets related to an increase in commodity prices.

    IN ADDITION, THE COMPANY:

    • Signed two large PPAs with NV Energy for up to 160 MW of Geothermal capacity.
    • Executed a PPA with CC Power for up to 125 MW of Geothermal capacity.
    • Commenced commercial operation of several projects including the CD4 and Tungsten 2 geothermal power plants, Wister and Steamboat solar plants, and Tierra Buena BESS, adding 73MW since the end of the first quarter
    • Strengthened its financial flexibility with the offering of $431.3 million in green convertible senior notes due in 2027 at an attractive coupon rate of 2.5%. The proceeds were mainly used to refinance higher-cost debt and the remainder will be used to support our renewable energy growth.
    • Buy back of approximately 260K shares at an attractive price
    • Prepaid $221.9 million of more expensive senior unsecured bond series 3.
    • Improved the diversity of its board of directors, adding two new highly skilled female members

    2022 GUIDANCE

    • Total revenues of between $710 million and $735 million.
    • Electricity segment revenues between $630 million and $640 million.
    • Product segment revenues of between $50 million and $60 million.
    • Energy Storage revenues of between $30 million and $35 million.
    • Adjusted EBITDA to be between $430million and $450million, including$15.0million for business interruption insurance proceeds, of which5.2 million were recorded in the six months ended June 30, 2022.
      • Adjusted EBITDA attributable to minority interest of approximately $38 million.

    The Company provides a reconciliation of Adjusted EBITDA, a non-GAAP financial measure for the three months ended June 30, 2022. However, the Company does not provide guidance on net income and is unable to provide a reconciliation for its Adjusted EBITDA guidance range to net income without unreasonable efforts due to high variability and complexity with respect to estimating certain forward-looking amounts. These include impairments and disposition and acquisition of business interests, income tax expense, and other non-cash expenses and adjusting items that are excluded from the calculation of Adjusted EBITDA.

    DIVIDEND

    On August 3, 2022, the Company’s Board of Directors declared, approved, and authorized payment of a quarterly dividend of $0.12 per share pursuant to the Company’s dividend policy. The dividend will be paid on August 31, 2022, to stockholders of record as of the close of business on August 17, 2022. In addition, the Company expects to pay a quarterly dividend of $0.12 per share in each of the next two quarters.

    CONFERENCE CALL DETAILS

    Ormat will host a conference call to discuss its financial results and other matters discussed in this press release on Thursday, August 4 at 10:00 a.m. ET. The call will be available as a live, listen-only webcast at investor.ormat.com. During the webcast, management will refer to slides that will be posted on the website. The slides and accompanying webcast can be accessed through the News & Events in the Investor Relations section of Ormat’s website. A replay of the webcast will be available approximately 120 minutes after the conclusion of the live call and will be archived for 12 months.

       
    Investors may access the call by dialing:
     
     Canadian participant dial in (toll free):1-833-950-0062
     United States participant international dial-in:1-844-200-6205
     All other locations:+1-929-526-1599
     Access code:044204
     
    Conference replay

     US Toll Free:1-866-813-9403
     Canada:1-226-828-7578
     International Toll:+44-204-525-0658
     Replay Access Code:113274
       

    ABOUT ORMAT TECHNOLOGIES

    With over five decades of experience, Ormat Technologies, Inc. is a leading geothermal company and the only vertically integrated company engaged in geothermal and recovered energy generation (“REG”), with robust plans to accelerate long-term growth in the energy storage market and to establish a leading position in the U.S. energy storage market. The Company owns, operates, designs, manufactures and sells geothermal and REG power plants primarily based on the Ormat Energy Converter – a power generation unit that converts low-, medium- and high-temperature heat into electricity. The Company has engineered, manufactured and constructed power plants, which it currently owns or has installed for utilities and developers worldwide, totaling approximately 3,200 MW of gross capacity. Ormat leveraged its core capabilities in the geothermal and REG industries and its global presence to expand the Company’s activity into energy storage services, solar Photovoltaic (PV) and energy storage plus Solar PV. Ormat’s current total generating portfolio is 1,168 MW with a 1,080 MW geothermal and solar generation portfolio that is spread globally in the U.S., Kenya, Guatemala, Indonesia, Honduras, and Guadeloupe, and an 88 MW energy storage portfolio that is located in the U.S.

    ORMAT’S SAFE HARBOR STATEMENT

    Information provided in this press release may contain statements relating to current expectations, estimates, forecasts and projections about future events that are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that we expect or anticipate will or may occur in the future, including such matters as our projections of annual revenues, expenses and debt service coverage with respect to our debt securities, future capital expenditures, business strategy, competitive strengths, goals, development or operation of generation assets, market and industry developments and the growth of our business and operations, are forward-looking statements. When used in this press release, the words “may”, “will”, “could”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “projects”, “potential”, or “contemplate” or the negative of these terms or other comparable terminology are intended to identify forward-looking statements, although not all forward-looking statements contain such words or expressions. These forward-looking statements generally relate to Ormat's plans, objectives and expectations for future operations and are based upon its management's current estimates and projections of future results or trends. Although we believe that our plans and objectives reflected in or suggested by these forward-looking statements are reasonable, we may not achieve these plans or objectives. Actual future results may differ materially from those projected as a result of certain risks and uncertainties and other risks described under "Risk Factors" as described in Ormat’s annual report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 25, 2022, and in Ormat’s subsequent quarterly reports on Form 10-Q and annual reports on Form 10-K that are filed from time to time with the SEC.

    These forward-looking statements are made only as of the date hereof, and, except as legally required, we undertake no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.


    ORMAT TECHNOLOGIES, INC AND SUBSIDIARIES
    Condensed Consolidated Statement of Operations
    For the Three and Six-Month periods Ended June 30, 2022, and 2021

     Three Months Ended June 30,Six Months Ended June 30,
     2022 2021 2022 2021 
     (Dollars in thousands, except per share data)
    Revenues:    
    Electricity        151,195 133,864 313,720 278,852 
    Product        10,392 7,410 25,020 16,053 
    Energy storage         7,491 5,627 14,048 18,348 
    Total revenues        169,078 146,901 352,788 313,253 
    Cost of revenues:    
    Electricity        95,517 83,736 190,038 163,587 
    Product        10,367 5,924 23,980 13,998 
    Energy storage         5,593 5,266 11,264 10,046 
    Total cost of revenues        111,477 94,926 225,282 187,631 
    Gross profit        57,601 51,975 127,506 125,622 
    Operating expenses:    
    Research and development expenses        1,388 1,128 2,452 2,004 
    Selling and marketing expenses        3,952 3,988 8,317 8,264 
    General and administrative expenses        13,526 18,240 31,098 36,846 
    Write-off of Energy Storage projects and assets128 — 1,954 — 
    Operating income        38,607 28,619 83,685 78,508 
    Other income (expense):    
    Interest income        179 808 521 1,071 
    Interest expense, net        (20,418)(18,626)(41,499)(37,642)
    Derivatives and foreign currency transaction gains (losses)        (3,998)658 (3,738)(16,208)
    Income attributable to sale of tax benefits        9,527 7,420 17,232 13,775 
    Other non-operating income (expense), net        (1,260)(21)(1,185)(352)
    Income from operations before income tax and equity in earnings (losses) of investees        22,637 18,858 55,016 39,152 
    Income tax (provision) benefit        (6,130)(4,268)(16,293)(7,275)
    Equity in earnings (losses) of investees, net        (1,562)605 (985)1,147 
    Net income        14,945 15,195 37,738 33,024 
    Net income attributable to noncontrolling interest(3,685)(2,169)(8,048)(4,739)
    Net income attributable to the Company's stockholders        11,260 13,026 29,690 28,285 
    Earnings per share attributable to the Company's stockholders:    
    Basic:0.20 0.23 0.53 0.51 
    Diluted:0.20 0.23 0.53 0.50 
    Weighted average number of shares used in computation of earnings per share attributable to the Company's stockholders:    
    Basic        56,114 55,992 56,089 55,990 
    Diluted        56,498 56,316 56,431 56,502 


    ORMAT TECHNOLOGIES, INC AND SUBSIDIARIES
    Condensed Consolidated Balance Sheet
    For the Periods Ended June 30, 2022, and December 31, 2021

     June 30, 2022 December 31, 2021
    ASSETS
    Current assets:   
    Cash and cash equivalents        263,425  239,278 
    Marketable securities at fair value        —  43,343 
    Restricted cash and cash equivalents         92,956  104,166 
    Receivables:   
    Trade         123,398  122,944 
    Other        18,910  18,144 
    Inventories        32,213  28,445 
    Costs and estimated earnings in excess of billings on uncompleted contracts13,823  9,692 
    Prepaid expenses and other        40,883  35,920 
    Total current assets        585,608  601,932 
    Investment in unconsolidated companies        114,699  105,886 
    Deposits and other        40,942  78,915 
    Deferred income taxes        137,961  143,450 
    Property, plant and equipment, net2,287,498  2,294,973 
    Construction-in-process         912,376  721,483 
    Operating leases right of use         19,935  19,357 
    Finance leases right of use         5,541  6,414 
    Intangible assets, net        347,216  363,314 
    Goodwill        90,200  89,954 
    Total assets        4,541,976  4,425,678 
        
    LIABILITIES AND EQUITY
    Current liabilities:   
    Accounts payable and accrued expenses        144,522  143,186 
    Billings in excess of costs and estimated earnings on uncompleted contracts12,707  9,248 
    Current portion of long-term debt:   
    Limited and non-recourse (primarily related to VIEs):76,976  61,695 
    Full recourse        101,614  313,846 
    Financing Liability        13,039  10,835 
    Operating lease liabilities        2,242  2,564 
    Finance lease liabilities        2,013  2,782 
    Total current liabilities        353,113  544,156 
    Long-term debt, net of current portion:   
    Limited and non-recourse:492,402  539,664 
    Full recourse:714,039  740,335 
    Convertible senior notes        420,418  — 
    Financing liability        236,057  242,029 
    Operating lease liabilities        17,394  16,462 
    Finance lease liabilities        4,135  4,361 
    Liability associated with sale of tax benefits        122,894  134,953 
    Deferred income taxes        80,965  84,662 
    Liability for unrecognized tax benefits        6,244  5,730 
    Liabilities for severance pay        14,288  15,694 
    Asset retirement obligation        87,483  84,891 
    Other long-term liabilities        4,254  4,951 
    Total liabilities        2,553,686  2,417,888 
        
    Commitments and contingencies   
    Redeemable noncontrolling interest        8,996  9,329 
        
    Equity:   
    The Company's stockholders' equity:   
    Common stock        56  56 
    Additional paid-in capital        1,253,242  1,271,925 
    Treasury stock, at cost         (17,964) — 
    Retained earnings        601,441  585,209 
    Accumulated other comprehensive income (loss)        (4,148) (2,191)
    Total stockholders' equity attributable to Company's stockholders        1,832,627  1,854,999 
    Noncontrolling interest        146,667  143,462 
    Total equity        1,979,294  1,998,461 
    Total liabilities, redeemable noncontrolling interest and equity        4,541,976  4,425,678 


    ORMAT TECHNOLOGIES, INC AND SUBSIDIARIES
    Reconciliation of EBITDA and Adjusted EBITDA
    For the Three- and Six-Month Periods Ended June 30, 2022, and 2021

    We calculate EBITDA as net income before interest, taxes, depreciation and amortization. We calculate Adjusted EBITDA as net income before interest, taxes, depreciation and amortization, adjusted for (i) termination fees, (ii) impairment of long-lived assets, (iii) write-off of unsuccessful exploration activities, (iv) any mark-to-market gains or losses from accounting for derivatives, (v) merger and acquisition transaction costs, (vi) stock-based compensation, (vii) gain or loss from extinguishment of liabilities, (viii) gain or loss on sale of subsidiary and property, plant and equipment and (ix) other unusual or non-recurring items. EBITDA and Adjusted EBITDA are not measurements of financial performance or liquidity under accounting principles generally accepted in the United States, or U.S. GAAP, and should not be considered as an alternative to cash flow from operating activities or as a measure of liquidity or an alternative to net earnings as indicators of our operating performance or any other measures of performance derived in accordance with U.S. GAAP. We use EBITDA and Adjusted EBITDA as a performance metric because it is a metric used by our Board of Directors and senior management in evaluating our financial performance. However, other companies in our industry may calculate EBITDA and Adjusted EBITDA differently than we do.

    The following table reconciles net income to EBITDA and Adjusted EBITDA for the three- and six-Month periods ended June 30, 2022, and 2021.

     Three Months Ended June 30, Six Months Ended June 30,
      2022  2021   2022  2021 
     (Dollars in thousands) (Dollars in thousands)
    Net income         $        14,945 $        15,195  $        37,738 $        33,024 
    Adjusted for:       
    Interest expense, net (including amortization of deferred financing costs) 20,239  17,818   40,978  36,571 
    Income tax provision (benefit)         6,130  4,268   16,293  7,275 
    Adjustment to investment in an unconsolidated company: our proportionate share in interest expense, tax and depreciation and amortization in Sarulla 4,167  2,899   6,291  5,364 
    Depreciation and amortization          47,334  42,126   94,103  82,955 
    EBITDA         $        92,815 $        82,306  $        195,403 $        165,189 
    Mark-to-market (gains) or losses from accounting for derivative 3,634  (990)  3,911  1,096 
    Stock-based compensation          2,999  2,623   5,813  4,720 
    Make-whole premium related to long-term debt prepayment 1,102  —   1,102  — 
    Reversal of a contingent liability         —  —   —  (418)
    Allowance for bad debts —  —   115  2,980 
    Hedge losses resulting from February power crisis in Texas         —  —   —  9,133 
    Write-off related to Storage projects and activity 128  —   1,953  — 
    Merger and acquisition transaction costs          —  474   249  958 
    Other write-off         —  134   —  134 
    Adjusted EBITDA         $        100,678 $        84,547  $        208,546 $        183,792 


    ORMAT TECHNOLOGIES, INC AND SUBSIDIARIES
    Reconciliation of Adjusted Net Income attributable to the Company's stockholders and Adjusted EPS
    For the Three and Six-month Periods Ended June 30, 2022, and 2021

    Adjusted Net Income attributable to the Company’s stockholders and Adjusted EPS are adjusted for one-time expense items that are not representative of our ongoing business and operations. The use of Adjusted Net income attributable to the Company’s stockholders and Adjusted EPS is intended to enhance the usefulness of our financial information by providing measures to assess the overall performance of our ongoing business.

    The following tables reconciles Net income attributable to the Company’s stockholders and Adjusted EPS for the three-month periods ended June 30, 2022 and 2021.

      Three Months Ended June 30,   Six Months Ended June 30,
      2022  2021  2022  2021
    (in millions, except for EPS)       
    GAAP Net income attributable to the Company's stockholders$11.3 $13.0 $29.7 $28.3
    One-time net expense related to February power crisis in Texas, net of taxes —  —  —  8.8
    Write-off of Energy Storage projects and assets 0.1  —  1.5  —
    Make-whole premium related to repayment of long-term debt 0.8  —  0.8  —
            
    Adjusted Net income attributable to the Company's stockholders$12.2 $13.0 $32.0 $37.1
            
            
            
            
    GAAP diluted EPS 0.20  0.23  0.53  0.50
    One-time net expense related to February power crisis in Texas, net of taxes —  —  —  0.16
    Write-off of Energy Storage projects and assets 0.0  —  0.03  
    Make-whole premium related to repayment of long-term debt 0.02  —  0.01  —
            
    Diluted Adjusted EPS 0.22  0.23  0.57  0.66


       
    Ormat Technologies Contact:
    Smadar Lavi
    VP Head of IR and ESG Planning & Reporting
    775-356-9029 (ext. 65726)
    slavi@ormat.com    		 Investor Relations Agency Contact:
    Sam Cohen or Joseph Caminiti
    Alpha IR Group
    312-445-2870
    ORA@alpha-ir.com 

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